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feh. When the total tax burden on the average person is more than 50% of wages, those pinhole leaks in the fiscal boat are nothing compared to the cannonball hole in the bottom.
Not where I have lived at any time ;link please. Not a article but actual official stats. I mean to average that when 40% pay no federal taxes and 60% pay for less than services they receive that is very misleading. Your state and local taxes would have to be every high: I'd think.
I think this argument is overly simplistic. The main reasons renters don't accumulate wealth actually has relatively little to do with whether they're homeowners or not. Home ownership is, and effect of a certain value system. It doesn't create a lot of wealth:
Home ownership is generally correlated with:
--Married people (who accumulate more wealth than singles or divorced people)
--Long term commitments (long term mindset helps people accumulate wealth)
The problem most renters have is:
--They pay too much rent as a % of their incomes.
--Even if their rent is reasonable, they blow the difference on other stuff instead of saving/investing it.
--Renters also tend to be younger and have lower incomes than homeowners.
Well duh homeownership is not scalable in this country (due to government interference) which means most renters cannot buy a home on their own income alone which guarantees the owner population will be skewed toward couples and widows.
Not where I have lived at any time ;link please. Not a article but actual official stats. I mean to average that when 40% pay no federal taxes and 60% pay for less than services they receive that is very misleading. Your state and local taxes would have to be every high: I'd think.
60% don't pay for less than services received. Probably less than 1%.
"The survey indicates in the past 15 years, the net worth of the typical home owner has ranged between 31 and 46 times that of the net worth of the typical renter. Home owners had nearly $200,000 in net worth compared to the average $5,000 net worth of renters."
Hmmm...which net worth would you rather have... $200k..or $5,000? Tough decision right?
...most home owners start out as renters during their college years, early career years - how much of this difference in worth is related to age? And certainly, if you can't afford a house there will be other things you can't afford.
Well duh homeownership is not scalable in this country (due to government interference) which means most renters cannot buy a home on their own income alone which guarantees the owner population will be skewed toward couples and widows.
Garbage. Most homeowners do NOT inherit their homes (despite your insistence that most folks are "subsidy kids", whatever that is). Most homeowners started out renting. Then they purchased.
So tell me again how homeownership is not scalable, and renters can't buy homes based on their income?
I agree. I think that renting is actually superior to home ownership if one's goal is financial independence/wealth. But the key is that you have to aggressively invest. Like you say, a lot of renters just end up spending what they should be investing.
Quote:
Originally Posted by mysticaltyger
I think this argument is overly simplistic. The main reasons renters don't accumulate wealth actually has relatively little to do with whether they're homeowners or not. Home ownership is, and effect of a certain value system. It doesn't create a lot of wealth:
Home ownership is generally correlated with:
--Married people (who accumulate more wealth than singles or divorced people)
--Long term commitments (long term mindset helps people accumulate wealth)
The problem most renters have is:
--They pay too much rent as a % of their incomes.
--Even if their rent is reasonable, they blow the difference on other stuff instead of saving/investing it.
--Renters also tend to be younger and have lower incomes than homeowners.
Didn't banks use to pay much higher interest on savings, so that you could usually keep ahead of inflation?
Incidentally, inflation is not just a recent phenomenon. Even before the dollar was finally decoupled from gold, there were a few periods of severe inflation throughout the early to mid 20th Century, usually during or after wars. In the late 1940s and early 50s there used to be radio PSAs urging Americans to fight inflation by being as productive as possible.
I have never seen such discrepancies between owning and renting. In Portland it's common to see $200,000 houses rent for $2500. I'm paying $500/mo to rent a room in a house of eight.
Yeah, it varies a lot by location, this was my earlier point.
Quote:
Originally Posted by freemkt
Ziillow and Trulia have been saying it is cheaper to own than to rent in at least 48 of the top 50 US housing markets.
They are wrong because they have wildly unrealistic assumptions about maintenance/repair and time costs of owning a home*. They also have a pessimistic figure for the rate of return on alternative investments. A fairer figure is at least 10% and arguably even 13% via a margined stock portfolio.
Cheap credit => inflated consumer purchasing power => Debt => Rise in prices of goods/services.
When mortgage lending was out of control, people were buying houses at prices that they shouldn't be able to at their income level. We saw the price of homes sky rocket.
When the purchase of car moved from a cash purchase to a short-term load and now to a leasing model, we saw the price of vehicles also rise.
A while back someone posted that our monetary policy rewards debt and punishes savings.... I guess that's along the same lines.
I for one purchased our starter home back in 1999 just a few months after college graduation. While I had only planned to be in a starter home for 5 years and its now going on 15, I am in a better position than most; rent in my area is higher than my monthly payment (insurance, tax, principle, interest) and homes are still fairly high for a single earner to afford. I also refinanced whenever it made sense and will be done in about 10 years on a 3%.
If I was facing rent, I'd probably be forced to relocate. Rent also tends to fluctuate a bit more. If you sign up for a fixed rate mortgage, what fluctuates is property tax. Perhaps I'm lucky but mine is up only a $1200 a year since I purchased in 1999 (keep in mind I live in a high property tax state). They don't have access to equity; we used our equity to finance an emergency repair and higher interest college debt (now fully paid). Rent also doesn't contribute to tax reduction. While I think it certainly is possible, I can't see myself being better off if I had decided (I almost chickened out..) to rent back in 1999 rather than purchase.
Cheap credit => inflated consumer purchasing power => Debt => Rise in prices of goods/services.
When mortgage lending was out of control, people were buying houses at prices that they shouldn't be able to at their income level. We saw the price of homes sky rocket.
When the purchase of car moved from a cash purchase to a short-term load and now to a leasing model, we saw the price of vehicles also rise.
A while back someone posted that our monetary policy rewards debt and punishes savings.... I guess that's along the same lines.
I for one purchased our starter home back in 1999 just a few months after college graduation. While I had only planned to be in a starter home for 5 years and its now going on 15, I am in a better position than most; rent in my area is higher than my monthly payment (insurance, tax, principle, interest) and homes are still fairly high for a single earner to afford. I also refinanced whenever it made sense and will be done in about 10 years on a 3%.
If I was facing rent, I'd probably be forced to relocate. Rent also tends to fluctuate a bit more. If you sign up for a fixed rate mortgage, what fluctuates is property tax. Perhaps I'm lucky but mine is up only a $1200 a year since I purchased in 1999 (keep in mind I live in a high property tax state). They don't have access to equity; we used our equity to finance an emergency repair and higher interest college debt (now fully paid). Rent also doesn't contribute to tax reduction. While I think it certainly is possible, I can't see myself being better off if I had decided (I almost chickened out..) to rent back in 1999 rather than purchase.
In 1999, was your mortgage interest plus taxes, maintenance, repair, time, and insurance already less than the market rent on a similar place? What was your down payment?
Any large payments early on reduce the financial advantage once you consider the opportunity cost.
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